Saturday, March 7, 2009

Two Leading Labor Unions Drop Out of Health Care Talks, Citing Discord Over "Public Plan" Option and Employer Contributions

The New York Timesreports that the American Federation of State, County and Municipal Employees and the Service Employees International Union have both pulled out of the Health Care Reform Dialogue. According to the New York Times, the unions withdrew from the talks because they favor a public insurance plan and mandatory employer contributions to health care, while insurance companies, some employers and Republicans strongly oppose these ideas.

Both unions are strong supporters of Obama, and they recently joined a group of unions and progressive organizations that will wage a campaign to generate political support for his budget proposal. The unions' departure demonstrates the deep conflict over a public plan option and employer sponsorship among participants in the important negotiations on health care reform.

Every Voice at the Table?Although Obama only recently held his "Health Care Summit," participants in the Health Care Reform Dialogue have been meeting since last Fall through the office of Senator Edward Kennedy who chairs the Senate Committee on Health, Education, Labor and Pensions. Some progressive organizations recently complained that advocates of a single-payer system were not invited to participate in the talks.

As the Health Care Summit began President Obama announced that "every voice" must be heard on the issue. The next day, however, the two unions withdrew from the talks in part due to conflicts over the issue of a public plan, which they believe could develop the infrastructure that would ultimately lead to a single-payer system.

Public Plan: Will the President Compromise on This Issue?The article suggests that the consensus proposal the group ultimately endorses will reflect the "lowest common denominator" among participants and that this would not include a public plan option which insurance companies and Republicans strongly oppose. The lack of a public plan option and mandatory employer contributions would conflict with Obama's campaign promises.

* Make employer contributions more fair by requiring large employers that do not offer coverage or make a meaningful contribution to the cost of quality health coverage for their employees to contribute a percentage of payroll toward the costs of their employees health care.

* Establish a National Health Insurance Exchange with a range of private insurance options as well as a new public plan based on benefits available to members of Congress that will allow individuals and small businesses to buy affordable health coverage.

Obama's Recent Flexibility on the Public Plan OptionPresident Obama has exhibited far more flexibility regarding the public plan option than he did during his campaign. Even as he kicked off the summit, he expressed his willingness to abandon the public plan option, and he recognized insurance company opposition to the proposal:

If there is a way of getting this done . . .where we’re driving down costs and people are getting health insurance at an affordable rate and have choice of doctor, have flexibility in terms of their plans, and we could do that entirely through the market, I’d be happy to do it that way. . . .

I recognize the fear that if a public option is run through Washington and there are incentives to try to tamp down costs . . . private insurance plans might end up feeling overwhelmed.

Critics will likely argue that Obama never really wanted to create a public plan option, but it is also plausible that he discovered that no progress would take place if that option remained on the table. Either way, this situation is looking a lot like the days of "HillaryCare." Leading Republicans have already denounced a public plan option and have argued in a letter to the President that:

[F]orcing free market plans to compete with these government-run programs would create an unlevel playing field and inevitably doom true competition.

Ultimately . . . we would be left with a single government-run program controlling all of the market.

Of course, the letter neglects to mention that government-sponsored health insurance already exists nationally and in every state (or that private-run entities, like schools and universities, compete with publicly funded entities and do not control the market). Consolidation could reduce the costs of coverage and the delivery of health care, which is efficient from an economic standpoint.

I am not advocating a single-payer system (because I am still thinking through the issues). But the answer cannot rest on bankrupt cries of governmental interference and socialized medicine. The debate must center on "how" and "when" the government can inject itself within the private sector -- not "whether" it can do so altogether.

9 comments:

The public plan option doesn't seem like a good idea to me. I just can't see it being successful and eventually all that would be left would be the government led insurance ruling as a monopoly over all the other public sector ones. I definitely am curious how this will end.

Well, we shall see. If I had to bet, I would guess that a public plan will not happen. My next guess would be that a limited public plan could happen. I would like to see some states as "laboratories" for full public coverage. Of course, this would not decrease the cost of care nationally, but it would at least allow the government to experiment with the idea.

As for a governmental "monopology," I will reiterate that the govrernment provides important resources in other areas -- and it does so by taxation and competition with the private sector. state-run primary education, colleges and graduate schools for example, compete with private schools, and provide an opportunity for children and adults to receive an education at a fraction of the cost of private schools.

I can entertain arguments that schools are different, but that's not the same as simply pointing out the POSSIBILITY that governmental program could shut out all others.

Very true, but can you imagine the people in the "test-area" states? They would certainly protest because its in the human nature to not like being different/worse. Or if it was a very good step for them then the other states would get jealous. It's would create a very interesting situation.

Right on target and right ... It is interesting to see the most fervent advocates of market competition vow to torpedo the president's reform plans if there is a public safety-net plan that competes with the private insurers. As a disabled Medicaid program participant, I cannot emphasize too strongly the need for a public safety-net program to close all the coverage gaps the commercial insurers create. Might as well have this out now instead of encouraging any more false hopes.

We have to be careful about conclusions we draw from the fact that the government is already deeply into healthcare. It seems the implication above is: gov't already there, and competition hasn't collapsed, therefore the more is better.

In fact, Medicare threatens to overwhelm the Treasury, more so than Social Security. And private plans do struggle to compete, or more specifically, to operate effectively when government mandates make them expensive and prone to lawsuits. If one were to plot "government involvement" against "consumer choice", we'd find an inverse relationship.

The promise that government health care involvement reduces costs or preserves competition isn't supported by the evidence.

Matt - I did not argue that "more is better." In fact, I stated that I did not have a position on the issue of a single-payer or a public plan because I was still developing my ideas.

I did argue, however, that demonizing governmental involvement simply because it's the government (e.g., by labeling it "socialism") does not advance discourse.

Finally, the Associated Press article I linked lists a study showing that a public plan would reduce costs (and competition). I believe that most of them actually show cost reduction and loss of competition. But this does not mean fewer doctors, but fewer insurance companies. Having lots of insurance companies does not inherntly improve health care. Why should having fewer of them inevitably lower the standards of health care?

I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.

About Me and the Blog

Professor Darren Hutchinson teaches Constitutional Law, Remedies, Race and the Law, and a Civil Rights Seminar at the University of Florida Levin College of Law. Professor Hutchinson also holds the prestigious Stephen C. O’Connell Chair.
Professor Hutchinson received a B.A. from the University of Pennsylvania and a J.D. from Yale Law School. Before teaching law, Professor Hutchinson practiced commercial litigation at Cleary, Gottlieb, Steen and Hamilton in New York City. He also clerked for the late Honorable Mary Johnson Lowe, a former United States District Judge in the Southern District of New York.
Professor Hutchinson's research has appeared in many prestigious journals including the Cornell Law Review, Washington University Law Review, UCLA Law Review, University of Michigan Journal of Race and Law, and University of Pennsylvania Journal of Constitutional Law.
He has also presented his research at numerous universities, including Yale, Stanford, Columbia, University of Pennsylvania, University of Michigan, University of California at Berkeley, University of Virginia, Cornell, Georgetown, and Boston University.

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